TAITEXMA ENTERPRISE CORPORATION v. TILLEMONT SHIPPING CORPORATION SA and Another

H E A D N O T E

Foreign defendant - cannot be served abroad - application for substituted service to take place here - some effect as service out of jurisdiction - international comity - applicant must show case falls clearly within at least one of sub-paragraphs of Order 11, rule 1.

IN THE COURT OF APPEAL

1993, No. 73
(Civil)

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J U D G M E N T

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Bokhary, J.A.:

1. This is the judgment of the Court.

2. The 1st defendant, which appeals against Deputy Judge Mitchell QC's Order of April 20, 1993, for substituted service of the writ upon it by way of service upon its solicitors here retained for the purpose of setting aside a Mareva injunction, is a foreign corporation. In particular, it is a Panamanian company. It is Panamanian for the reason that it was incorporated in Panama. Under our law, therefore, it is of Panamanian domicile. It is so by virtue of the rule succinctly stated by Lord Denning MR in The Vrontados [1982] 2 Lloyd's Rep. 241 in these words (at p. 245): "a foreign corporation is domiciled in the same country as that in which it is incorporated".

3. Like the Panamanian company with which the Court of Appeal in England had to deal in that case, the 1st defendant has no residence anywhere - not even in Panama. All it has is a domicile there, where it was incorporated.

4. As this company incorporated outside Hong Kong has not established any place of business here, there is no question of service on it under Part XI of the Companies Ordinance, Cap 32.

5. What remains?

6. Order 11 does not of itself provide a solution. As Lord Denning MR pointed out (also at p. 245) in The Vrontados (supra), service of a writ out of the jurisdiction is an exercise of sovereignty within the country in which service is effected, so that where a foreign company is to be served in its country of incorporation and domicile, such service must be effected through diplomatic channels and in accordance with the way in which companies are served in that country.

7. In the present case, we have no evidence of Panamanian law. Falling back upon the rule that foreign law is to be taken as the same as ours in the absence of evidence of any difference, it would appear that service could not be effected on this company in Panama unless it be by some form of substituted service. For we certainly have no prescribed manner for serving in Hong Kong a company which was incorporated here but has no residence here. The reason is quite simply that there can be no such company. For a company incorporated here is required (by section 92(1) of the Companies Ordinance, Cap 32) to have a registered office here at the latest by the time when it begins to carry on business. And (as section 356 of that Ordinance provides) service on it can be effected at its registered office. There is no evidence that the 1st defendant has any registered office in Panama.

8. For that broad reason, service in Panama does not appear to be an option in the present case. It does not matter whether there is another reason, being the narrow one which the learned Deputy Judge accepted, which is that no Order 11 application could succeed since the plaintiffs would not be able to file an affidavit stating, in the words of rule 4(1)(c) of that Order, "in what place or country the defendant is, or probably may be found". What we do say as to that is this. We should not be taken as having decided that it is inaccurate to say that a company with no residence anywhere is or probably may be found in the country in which it was incorporated and is domiciled.

9. Service in Panama not being an option, all that remains is service in Hong Kong. And the only service possible here is substituted service. That is regulated by Order 65, rule 4, which reads:

"(1) If, in the case of any document which by virtue of any provision of these rules is required to be served personally or in the case of a document to which Order 10, rule 1, applies, it appears to the Court that it is impracticable for any reason to serve that document in the manner prescribed on that person, the Court may make an order for substituted service of that document.

(2) An application for an order for substituted service may be made by an affidavit stating the facts on which the application is founded.

(3) Substituted service of a document, in relation to which an order is made under this rule, is effected by taking such steps as the Court may direct to bring the document to the notice of the person to be served."

That extends to companies. For reading Order 10, rule 1(2) subject to Order 65, rule 3(2) - as the latter expressly provides - the former covers service by sending a copy of the writ by registered post to a defendant company at its registered or principal office. And an enactment such as section 356 of the Companies Ordinance, Cap 32 (which permits service of documents on a company at its registered office but does not exclude other forms of service on it) does not exclude the application of Order 10, rule 1. For sub-rule (7) thereof provides only that the rule shall have effect subject to any such enactment.

10. In The Vrontados (supra) Lord Denning MR (who was in the minority) was of the view that substituted service was appropriate because no other mode of service was practicable in all the circumstances. Ackner and O'Connor LJ (who formed the majority) were of the view that substituted service would have been appropriate if, contrary to their view of all the circumstances there (which differ from those of our case on this aspect), no other mode of service was practicable.

11. As far as machinery is concerned, we are satisfied that nothing other than substituted service would work.

12. Machinery, however, is not the only thing that matters. It has to do with how to bring a foreign defendant within our jurisdiction. But it has nothing to do with the first question, which is whether it should be brought within our jurisdiction, a step which involves what is sometimes called an "exorbitant" exercise of jurisdiction. It is as well to recall the "guiding principle" adopted by Lord Simonds in The Brabo [1949] AC 326 at 350 that "it ought always to be considered a very serious question ... whether this court ought to put a foreigner, who owes no allegiance here, to the inconvenience and annoyance of being brought to contest his rights in this country ...": albeit that, in this case, the "foreigner" is one as ethereal as a Panamanian registered company with no established place of business anywhere in the world.

13. A foreign corporation is not immune from suit here just because it cannot be served in its own country. Nor, however, should the fact that it cannot be served in its own country make us more prone than otherwise to exercise exorbitant jurisdiction over it.

14. That, since it is simply an insistence upon even-handedness, would follow even if only on principle alone. But if authority were needed, the same is to be found in the decision of the Court of Appeal in England in Myerson v. Martin [1979] 1 WLR 1390, where Eveleigh LJ made this clear and convincing statement (at p. 1396):

" In approaching this problem I think it is necessary to distinguish between the extent of the court's jurisdiction and how and when it will be exercised. The procedure for its exercise is laid down in the Rules of Court. Therefore, when considering the exercise of jurisdiction under R.S.C., Ord. 65, r. 4, the court should have regard to other relevant rules, R.S.C., Ord. 11 is one such. It provides that the court may permit service of process outside the jurisdiction but only in a limited number of cases listed in that rule. When the defendant is abroad and the case is outside the court's jurisdiction under Ord. 11, I do not think that the court should exercise its discretion under Ord. 65, r. 4, to order substituted service where the effect would be to add yet another cause of action to those listed in Ord. 11. So, even if the court were to have jurisdiction under Ord. 65, r. 4, I do not think that this case is a proper case in which to exercise it."

15. What it comes down to is this. Where a foreign defendant cannot be served with originating process abroad for want of machinery, and the court is therefore asked to make an order for substituted service here, then the court should bear in mind that, even though the writ is not issued for service out of the jurisdiction and substituted service thereof would (if ordered) take place here, nevertheless the effect of such an order would be the same as that of giving leave to serve out of the jurisdiction. That is something which is closely regulated by the Rules of Court under Order 11 in order to meet the requirements of international comity. So the court should insist upon the applicant showing that its case falls clearly with in at least one of the sub-paragraphs of Order 11, rule 1, and should refuse to make an order for substituted service unless that is shown. For, whatever form it takes, the exercise is in substance one by which a person who is beyond our borders is brought before our courts. There are limits to be observed when engaged upon that sort of exercise. And those limits, which are based on international comity, cannot be ignored simply because, as a matter of form, one is not proceeding directly under the Order in which they are formally enshrined in our Rules of Court.

16. Now, that being the proper practice, how do things stand in the present case? Although the plaintiffs say that they could indeed show that their case falls clearly within at least one of the sub-paragraph of Order 11, rule 1, they had not actually set about doing so below. Nor have they attempted to do so before us. And if they had attempted to do so before us, we could not, in fairness to the 1st defendant, have entertained the attempt. For the 1st defendant says that if that attempt had been made below, then it would have filed evidence on the point, since the application below was made ex parte on notice, so that it was present resisting the application.

17. In those circumstances, we do not think that the order for substituted service can be allowed to stand. In our judgment, the appeal must be allowed and the order for substituted service must be set aside, but without prejudice to the plaintiffs' right to make a fresh application for such an order, in conformity with the practice which we have indicated as the correct one. As to costs, we make an order nisi for costs here and below in favour of the 1st defendant.